Welcome to another installment of Swamponomics. The column that dives into the week’s morass of top news stories and swims through the stream of economic fallacies that have been accepted as conventional wisdom by swamp creatures for years. We hope this satisfies your demand for real and alternative economic insight not found in the minds of leftists anywhere.
Licensing Reform
Occupational licensing
is just another way for the government to meddle in the interactions of private people and give a handful of busybodies something to do. But, according to proponents, without these licenses, someone without 2,000 hours of mandated training will make you sick!
Across the country, many states have initiated licensing reform plans. From barbers to cosmetologists, there is a push to remove egregious, superfluous, and bureaucratic red tape that serve as barriers to career entry. Those who have been in their respective service industries for a long time would support licensing because it limits competition – but it doesn’t benefit the consumer. Don’t tell that to hairdresser Lyn Doans, who told a local news affiliate:
“Would you just sit down and just let anyone cut your hair? Or, would you allow your daughters, or your wife go out and just have anybody do their hair? I don’t think so. Are you just going to let anybody cook your food, and eat it, and not know if the kitchen is clean or not? I mean this is ridiculous, I’ve never heard of such a thing.”
Well, chefs are not licensed, and, if they were, it would be just as ridiculous.
The market has checks and balances, especially in today’s digital age. Without the internet, you know your business is successful if you have people repeatedly patronizing your company. With the internet, you can find out everything you need to know about enterprises – whether that Italian restaurant had cockroaches in the sauce or if that barber cut off a chunk of someone’s ear. What makes licensing advocates think that government approval will force a hairdresser to maintain a clean premise or for a taxi driver to offer a superb and safe driving experience?
Consumers, for the most part, are smart. If they are satisfied with a product, they will continue to buy that ketchup or watch. If they don’t like it, they will search elsewhere for a good that satisfies their needs.
Taxing Job-Stealing Robots
A new alliance has been born – at least on the subject of robot levies. Recently, Rep. Alexandria Ocasio-Cortez (D-NY) suggested a 90% tax on robots or companies that use them. Her remarks echo that of Bill Gates, who reiterated his support for penalizing robots the same way you punish humans – income tax, social security tax, the works.
This isn’t a new concept. Many experts have come out in favor of taxing automated technology to slow down the acceleration of automation, fund a job replacement program, and implement wage insurance.
But how is a robot any different from a Windows operating system, Microsoft Office, or a smartphone? Should politicians retroactively tax Windows 95? Indeed, the T-5000 is just another form of capital aimed at improving efficiency and boosting productivity. This results in a tsunami of new wealth, goods, and services never seen before.
Moreover, innovation makes populations better off. Technology and human progress go hand in hand, and this has been the case for centuries. Wheels, light bulbs, automobiles, and computers have replaced the human factor, allowing people to offer their human capital in other in-demand industries. Rather than rely on John Smith and Jane Doe for menial work, Mr. Smith and Ms. Doe can focus on more important parts of the business, or fund their own ventures, or realize their own dreams of becoming the next great playwright.
One more important point: Robots replacing humans isn’t a guarantee. Businesses may realize it is more cost-effective to employ human workers than to institute a robotic workforce.
Breaking Up Big Tech
Senator Elizabeth Warren (D-MA) is proposing an idea that will garner the support of leftists who hate corporations and conservatives who want to exact revenge on Big Tech. The 2020 presidential candidate recently unveiled a plan to break up technology juggernauts, like Amazon, Facebook, and Google. Writing in a blog post, Warren recommends making “big, structural changes to the tech sector to promote competition,” which includes “breaking up” these Silicon Valley giants.
She writes:
“Today’s big tech companies have too much power — too much power over our economy, our society, and our democracy. They’ve bulldozed competition, used our private information for profit, and tilted the playing field against everyone else. And in the process, they have hurt small businesses and stifled innovation.”
To the right, this seems like a sensible idea because they have metastasized into gatekeepers that censor any information that contradicts groupthink. But, for a philosophy that endorses free market capitalism, it defies economic logic. Let’s assess her assertions.
First, the competition looks like it has been stifled, but the number of search engines and social networks has ballooned, especially in the wake of privacy scandals and expunging popular conservatives. From DuckDuckGo to Bing, from Gab to Trump Chat, there is a new supply filling demand and there are many alternatives to utilize – it’s just that people have become accustomed to tweeting, Liking, and Googling; it takes time to alter behaviors.
Second, it is true that these businesses profit from your private information. But whose fault is this? We voluntarily exchange all of our information – names, images, passports, and intimate details of our day-to-day lives – for a free service. Mark Zuckerberg and Jack Dorsey did not put a gun to your head to share with the world your age, occupation, and lover.
Third, there is little evidence to support the argument that Big Tech has hurt small businesses. In fact, through innovative search algorithms and the prevalence of social media, these companies may have facilitated a small firm’s success. (Manipulating search results to influence politics or suppressing voices because they disagree with an ideology is another discussion.)
While it is tempting to get payback against the smug left-leaning hipsters of Mountain View, doing so contradicts pro-market principles of conservatism and libertarianism. President Donald Trump’s base may need to be careful getting into bed with Warren.
Is Government the Answer?
All these issues have the same conclusion: The government is the cure. You need taxes to save mankind from the machine, you need the state to protect you from evil hairdressers, and you need regulations to tweet. As former President Ronald Reagan said, “Government is not the solution to our problems. Government is the problem.” Many proposals that involve the state often appear as the default remedy to any ailment of society, but its answers to societal troubles are usually worse than the difficulties themselves.
